Falcon Natural Gas Spuds First Well in Live Oak Drilling Program

Falcon Natural Gas, with Bayou City Exploration, has begun the first well of their planned drilling project located in Live Oak County, 12 miles southwest of George West, Texas. The Leopard Branch Prospect will target the Queen City formation. The Queen City formation is one of the main hydrocarbon producers in the area and has track record of excellent production. Total drilling depth is expected to reach 6,500 feet. A number of pipelines are located nearby and no surface issues are expected.

``We are now in the process of drilling two wells with our partners at Bayou City Exploration,'' stated Falcon's CEO, Mr. Fred Zaziski. The company expects both wells to be completed by the second week of January.

Falcon Natural Gas Corp. has purchased 12.5% of the working interest in the Live Oak County Prospects, which include Jaboncillo Windmill Prospect, Leopard Branch Prospect and Frost National Bank Deep Prospect. Falcon also will pay 16.67% of all well costs to casing point on the initial well drilled on each prospect and 16.67% of all G&G costs, third party prospect fees, land brokerage costs, lease bonus and all other similar costs of the prospect.

The drilling area in south Texas was chosen because of its location within one of the largest natural gas producing areas of North America. The comprehensive pipeline infrastructure and enormous industrial resources make it an ideal drilling area.